SEBI imposes Rs 25 lakh penalty on MCX for incomplete, delayed disclosures

The capital market watchdog said that while the commodity exchange disclosed its transaction with 63 Moons, a full disclosure of the material information was not made.

The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 25 lakh on MCX for alleged failure to make complete and timely disclosures.

The monetary penalty has been imposed post an investigation in to the purchase orders given by MCX to 63 Moons. The SEBI probe also examined whether the bourse allegedly gave wrong information regarding timeline of a new Commodity Derivative Platform (CDP) Project.

In an order passed by whole time member Ashwani Bhatia, the capital market watchdog said that while the commodity exchange disclosed its transaction with 63 Moons, a full disclosure of the material information was not made.

“It was noted that… MCX disclosed that it had issued a purchase order to 63 Moons… initially for quarter ended December2022 and thereafter for half-year ended June 2023. However, the fact that MCX paid Rs.3260 crore for quarter ended December 2022 and Rs.81 Crore per quarter till half-year ended June 2023 was not disclosed by MCX to public,” stated the SEBI order.

“The said quarterly payment to 63 Moons of Rs.222 Crore for 3 quarters between Oct. 2022 – June 2023 was more than the annual profit of MCX viz. Rs. 118 Crore for previous FY 2021-22. The said disclosure was made only on January 11, 2023 as ‘Note to Unaudited Financial results for quarter ended December 31, 2022’, published on BSE’s website,” highlighted the SEBI order.

The SEBI investigation also revealed that MCX and its clearing corporation MCXCCL ended up in a situation wherein they were unable to complete the new CDP project in a timely manner and, more importantly, were potentially left without any vendor support for their core software.

“The said situation placed the very continuity of the MCX’s exchange and MCXCCL’s clearing platform at risk, which could have led to a possibility of  disruption  in their core activities as exchange and clearing  corporation, impacting a wide range of stakeholders and the securities market as a whole,” stated the SEBI order.

SEBI had issued a show cause notice to MCX in October 2023 after a special purpose examination of MCX and Multi Commodity Exchange Clearing Corporation Ltd. (MCXCCL).